Friday, March 25, 2016

Our progression towards a nation of rich and poor

The idea behind our approach is similar to the idea behind a doctor’s ability to predict your risk of heart disease. Using several pieces of information (blood pressure, cholesterol, etc.), your doctor can make a reasonable estimate of your chances of having a heart attack in the next 10 years. These numbers are based on statistical patterns derived from a very large sample of families that make up the Framingham Heart Study, the longitudinal study of cardiovascular health that began in 1948.

Our predictions of economic risk work in a similar way. Using hundreds of thousands of case records taken from a longitudinal study of Americans that began in 1968, we estimate the likelihood — based on factors like race, education, marital status and age — of an individual’s falling below the official poverty line during the next five, 10 or 15 years. (The poverty line for a family of four in 2015 was approximately $24,000.)

Take someone ... who is in his or her later 30s, white, not married, with an education beyond high school. It turns out that the 15-year risk of poverty for such a person is actually 32 percent. In other words, one-third of such individuals will experience at least one year below the poverty line in the not-so-distant future...between the ages of 20 and 75, nearly 60 percent of Americans will spend at least one year below the official poverty line, and three-quarters will experience a year below 150 percent of the poverty line.

We are in danger of becoming an economically polarized society in which a small percentage of the population is free from economic risk, while a vast majority of Americans will encounter poverty as a normal part of life.